Hollywood writers face uncertainty on return

Hollywood writers finally returned to work on Wednesday with a brighter future in new media but facing uncertainty about whether their 14-week strike will cost them lucrative TV work.

The Writers Guild of America hailed its new contract with major studios as a deal that secured writers a stake in the evolving market for movies and TV shows on the Web.

But the promise of those revenues may not offset the $3 billion lost to the local economy or changes to the way Hollywood runs its TV pilot season, long a lucrative source of income for writers.

"I think it's a good deal, not a great deal. It gets the writers a beachhead on the Internet, which was critically needed, but in the short term there were definitely losses," said Jonathan Handel, lawyer with the Los Angeles-based Troy Gould firm and a former WGA counsel.

Some 10,500 WGA members went on strike against major film and TV studios in November in a dispute centering largely on fees they wanted when their work was distributed on the Internet. But the walkout could dramatically change the way the TV industry works.

Media giants News Corp and Walt Disney Co have already said they would scale back TV pilots due to the strike, while Jeff Zucker, chief executive of NBC Universal, the media wing of General Electric Co, said he wanted to largely exit the business of developing pilots.

TV networks use pilot episodes to decide whether to schedule a series, but the industry has long lamented the process as too expensive and said pilots often led nowhere.

"There are going to be fewer development deals, fewer pilots made and that is money (for writers) that won't come back," Handel said.

Long-term gain, short-term pain

WGA West President Patric Verrone said it could take five to 15 years for the fruits of the new contract to become apparent.

"I think it's going to take a long time to really look back and see how much the Internet is worth," he said.

The writers were not the only people feeling the financial pain. Jack Kyser, chief economist for the Los Angeles County Economic Development Corp, estimates the strike cost the local economy more than $3 billion, including $981 million in lost production spending on scripted TV series that were shuttered.

About $1.3 billion was lost to caterers, valets and other industry-related businesses, $772 million in direct writing and crew wages, and $60 million from a downsized Golden Globe Awards show, said Kyser.

He sees more pressure ahead as the media giants reduce the number of pilot episodes produced.

"It's going to be more competitive for writers, if you don't have all these pilots being produced. The ground rules have changed," said Kyser.

Still, Handel noted that writers' achievements were not to be underestimated, particularly after the studios initially balked at their demands for new media fees.

Writers scored important victories by increasing the rates they will be paid for downloads and in winning first-ever residuals for ad-supported streaming of shows.

"This contract will make it easier three years from now for the parties to be on the same page to negotiate," he said.