(Agencies)
Updated: 2008-01-18 11:37

LOS ANGELES -- Hollywood directors reached a tentative contract deal Thursday with studios, a development that could turn up the pressure on striking writers to settle their 2-month-long walkout that has crippled the entertainment industry.

Striking film and television writers picket outside Warner Brothers Studios Monday, Jan. 14, 2008, in Burbank, Calif. [Agencies]

"Two words describe this agreement -- groundbreaking and substantial," said Gil Cates, chair of the Directors Guild of America's negotiations committee. "There are no rollbacks of any kind."

Among other things, the three-year agreement establishes key provisions involving compensation for programs offered on the Internet.

That issue has been a key sticking point between striking writers and the studios, which broke off talks on December 7.

The writers walkout has halted work on dozens of TV shows, disrupted movie production, turned the glitzy Golden Globes show into a news conference and threatened the upcoming Academy Awards ceremony.

The deal between directors and the Alliance of Motion Picture and Television Producers, which represents studios, was lauded by top executives from eight major companies, including Fox, Paramount Pictures Corp., The Walt Disney Co., CBS Corp., Sony Pictures Entertainment, Warner Bros., MGM and NBC Universal.

In a joint statement, the executives said they hoped the agreement would signal the end of an "extremely difficult period for our industry."

They called on the writers guild to join in the kind of informal talks with industry leaders that preceded the directors' negotiations, and said the deal with directors established a precedent for the industry's creative talent to "participate financially in every emerging area of new media."

The Writers Guild of America said it would evaluate the terms of the directors' proposed contract. The guild also reiterated that it has been calling on the studios to resume negotiations.

"We've been making independent deals, so we're in a negotiating mood," said Writers Guild of America, West, President Patric Verrone, referring to interim agreements the guild has reached with companies such as United Artists and The Weinstein Co.

Verrone declined to comment on specifics of the deal by directors or compare it to what the writers are seeking until he saw a copy of the proposed contract, which he expected to receive from the directors guild.

Writers previously said directors do not represent their interests.

Alliance President Nick Counter said in a statement that the directors' talks focused on key issues, and the result was a groundbreaking agreement for the industry at large.

"This deal was strongly influenced by the writers strike," said Jonathan Handel, an entertainment lawyer in Los Angeles and a former counsel to the writers guild. "It shows all the earmarks of the improvements the writers were looking for — but it doesn't achieve them by any means."

In the significant area of streaming media, the deal falls short of "fundamental fairness," Handel said.

However, he considers it unlikely the writers can get a better agreement.

The deal with directors gives their union jurisdiction over programs produced for distribution on the Internet and sets a new residuals formula for some paid Internet downloads that essentially doubles the rate currently paid by employers, the guild said.

In addition, it sets residual rates for ad-supported streaming and use of clips on the Internet.

The deal was welcomed by others in Hollywood.

"I'm very pleased with the new agreement and I hope it helps speed up the negotiations" with the writers guild, George Clooney said in a statement.

Clooney has often commented on the need to resolve the strike to put thousands of people back to work in Hollywood.

Roberta Reardon, president of the American Federation of Television and Radio Artists, which represents actors, singers, dancers, announcers and others, called the deal encouraging and said her guild was optimistic the writers guild would resume negotiations soon.

The directors guild was well-prepared when it started negotiations January 12.

It had spent $2 million researching the potential value of new media over the next decade and held a series of meetings with key studio heads to establish a basis for the formal talks.

Gil Cates, who's been involved in union contract negotiations for three decades, served as lead negotiator for directors.

He is also producing this year's Academy Awards, which are imperiled by the writers' standoff.

Last Sunday's Golden Globes show was reduced to a news conference after actors refused to cross writers' threatened picket lines.

NBC lost millions of dollars in ad revenue, and award winners were deprived of instant publicity that could have provided a box-office bump.

New media issues also were expected to dominate negotiations with the Screen Actors Guild, whose contract expires in June.

The directors guild said late last year that it would delay the start of talks to give writers a chance to come to an agreement with studios.

But the guild clearly lost patience after negotiations between the writers and studios broke off last month and the strike dragged on.

Among other things, the studios' deal with directors says programs produced for the Internet will be directed by guild members, with the exception of low-budget shows, and payments for downloaded TV programs and movies will be based on a distributor's gross.

Distributor's gross represents the amount received by the company responsible for distributing the film or TV program on the Internet.

Companies are also contractually obligated to provide the guild "unfettered access to their deals and data," the directors guild said, calling that unprecedented transparency.

In their talks, the writers guild and studios clashed over using a percentage of gross receipts to determine Internet compensation.

The guild said it sought that approach but was told by the alliance it was an unworkable and unacceptable formula. Instead, the studios offered, for example, a flat $250 payment for a year's use of an hourlong TV show on the Web.

The guild balked, citing the $20,000-plus residual that writers now earn for a single network rerun of a TV episode.

Also at issue for the writers guild is unionization of reality and animation writers.

Talks broke down after the alliance demanded the guild take that and other issues off the table, claiming there had been an agreement to drop it.

The guild's next move may be influenced by history.

There's a lingering resentment among members over what they considered raw deals in the 1980s involving what eventually became lucrative home-video and DVD markets.

The writers guild home-video deal was shaped by a deal made previously by the directors guild, following an industry practice of pattern bargaining. That created resentment among some writers guild members toward the directors guild.