Are studios colluding to bring down talent costs?

By Eriq Gardner

Is there a massive antitrust class action brewing in Hollywood's backyard?

The NY Times' Michael Cieply buried that potentially bombshell charge this weekend in the middle of a column about the formidable power that Hollywood studios still command. Cieply notes that studios have cut production costs and that privately, lawyers and agents in town are wondering whether there's some collusive forces at hand driving down the price that studios are willing to pay actors and other talent. Cieply writes:

One theory holds that studio executives and lawyers, while engaged in legitimate joint bargaining through the Alliance of Motion Pictures and Television Producers during the three-month writers strike and, later, with the actors guild, used idle moments to reach an industrywide consensus that talent costs should come down.

The economy has been bad, and many companies throughout America are cutting back. On the other hand, as been noted by many, this year's box office tally may be recession-proof (though studios often site declining DVD sales as the cause of much woe).

Agents and lawyers have been grumbling about clients not getting fair value in deals since agents and lawyers first came to town, and they'll continue to do so regardless of who-is-getting-what. Nevertheless, the situation is getting desperate out there for wide swaths of the talent community, and desperate times breed desperate actions.

Rod Lurie Claims Touchstone Used WGA Strike To Impeach His 'Commander-in-Chief' Money

By Eriq Gardner

We're a bit surprised we haven't seen more lawsuits emanating from last year's writers' strike. Especially after the words “force majeure" became the catchphrase around town.

Now, producer-director-writer Rod Lurie is suing Touchstone TV claiming he is owed $1 million for work — or non-work — on the cancelled series "Commander-in-Chief." The lawsuit, filed in Los Angeles Superior Court, claims that after he was replaced as executive producer of the series, Touchstone satisfied its original "pay or play" contract with Lurie by signing a two-year, $3 million extension with him that apparently paid him for sitting on the sidelines in a consulting capacity. But Lurie claims that Touchstone used the WGA strike last year to wiggle out of its financial obligation to him.

Lurie is represented by Henry Gradstein.

Guilds Take Battle For Increased Profit Participation to California Leglislature

Posted by Eriq Gardner

Think that just because the writers' strike was settled, the battle over how to split up the entertainment revenue pie is over? Think again.

Labor guilds including the WGA and the International Brotherhood of Teamsters union are promoting a new bill in the California state legislature that would boost revenue to profit participants from content that is licensed to affiliated cable television networks. The guilds contend that studios undersell programs to cable stations with which they have corporate affiliation.

Sound familiar? The bill (SB1765), promoted by state Sen. Sheila Kuehl, takes direct aim at so-called "vertical integration" claims against studios that create and distribute content and often end up negotiating distribution deals with themselves. The bill would require that studios sell content at the "fair market value" they would fetch in a competitive market. The studios obviously oppose the efforts, arguing, in part, that determining that fair market value is easier said than done.

The topic has long been one of the most heated in entertainment litigation. Cases involving ABC's "Home Improvement," Fox's "The X-Files" and, just last summer, NBC's "Will & Grace," have all included claims that vertical integration has shortchanged profit participants when the shows were sold to affiliated entities. It will be interesting to see whether the Kuehl, a former child actress, can interest her fellow members of the legislature in the issue.

This is the first time the guilds have gotten involved in the issue

The WGA Strike: A Pending Deal?

Posted by Eriq Gardner

It's been a while since we checked into the ongoing WGA strike, but judging by today's news, there appears to be tremendous hope that a deal could be announced soon. Perhaps just in time too, as some lawmakers are beginning to buzz about stepping into negotiations.

Our favorite former WGA lawyer, Troy & Gould's Jonathan Handel, recently held an investor conference call where he reviewed the situation and provided an insider's look into what a settlement is likely to look like.  Assuming a deal is signed, Handel also answers the question on whether directors will be able to invoke "favored nation" clauses to improve their own recently signed deal.

Letterman Is Back, But His 'Lawyer' Has Left the Building

Posted by Matthew Belloni

David Letterman has a funny way of thanking his lawyer. On last night's "Late Show," which has returned with writers after a two-month absence due to the WGA strike, Dave introduced his "personal attorney" Jim Jackoway to explain the terms of Letterman's deal with the WGA.

Jackoway, a top talent dealmaker (and THR Power Lawyer!), is indeed Dave's longtime attorney (he did Letterman's most recent deal keeping the host on CBS through 2010 for about $30 million a year). But instead of a middle-aged lawyer, a nervous, chubby kid with dark circles under his eyes appeared on stage briefly before running through the crowd and exiting the rear of the Ed Sullivan theater. Funny? We laughed, but mostly because we were wondering what Jackoway thought of the bit. He probably spent his holidays slaving over the deal with the WGA that allows the two latenight shows produced by Letterman's company Worldwide Pants to return with writers, only to see himself skewered on Dave's first show back. Then again, for the ultra-ironic Letterman, a ribbing on the air might be the ultimate thank-you gift.

Incidentally, we wanted to post a clip to let readers decide whether the bit was funny, but alas, YouTube users aren't obsessed with entertainment lawyers the way we are, and CBS hasn't posted the episode online. So we've had a two month strike over what producers are going to pay writers for Internet reuse, and when one deal finally gets done, the show is nowhere to be found online. That's an irony worthy of Letterman's show.

WGA Strike: The Official NLRB Complaint

Posted by Eriq Gardner

Today comes news that the WGA has filed charges with the National Labor Relations Board against the AMPTP "for its refusal to bargain in good faith" during the ongoing work stoppage.

According to the WGA, producers issued an "ultimatum" and threatened to break off talks if AMPTP didn't take certain issues, such as reality TV and animation jurisdiction, off the table. As evidence, the WGA offers this letter by Nick Counter, president of the producers’ alliance. In the letter, Counter references the fact that AMPTP wants the WGA to pull back certain demands -- "six issues" -- before "negotiations can proceed further."

In the cover letter to its official charge document, WGA West general counsel (and THR Power Lawyer!) Tony Segall writes "The NLRB has long held that an employer may not require a union to resolve specific proposals as a precondition to discussing other subjects."

Simple, right?

Not so fast. In its statement, the AMPTP blasted the WGA for "pounding the table" with a "baseless, desperate NLRB complaint." The statement didn't include any rationale for declaring the NLRB complaint as such.

Let's take a gander at what producers might argue: Negotiators are only required by the NLRB to meet and bargain in good faith on "mandatory" issues. Parties are not required to meet on non-mandatory issues. One issue that falls under the latter category is so-called "recognition clauses" that establish who the union is representing. (see Labor Board v. Borg-Warner Corp.) The WGA's demand that it cover reality and animation writers could fall under this type.

In any case, it could take 45 days for an  NLRB hearing to be scheduled before an administrative law judge, and many more months for an appeal. Could it be that the NLRB complaint is a showy act of brinksmanship more than anything else.

WGA Strike: Can Reality TV Writers Be Assimilated Without Their Consent?

Posted by Eriq Gardner

It's starting to look like the WGA strike is headed for the long, hard slog. In late November, there was an inch of optimism as both sides traded new proposals and met to bargain. Unfortunately, any holiday season goodwill between the two sides seems gone.

Before the two sides meet again, some new issues have come up. In the WGA's last proposal, the writers demanded first-time jurisdiction over reality TV and animation writing. The WGA may have cooked this up as a method to get the AMPTP to bend on its other points. (The producers almost certainly would not want to head into any future strike without reality TV to save its programming grid.)

But the proposal does raise some interesting legal questions. Assuming AMPTP granted the WGA's proposal to bend reality writers into their fold, the New York Times asks, "Can they impose union membership on a unit whose members have not signed up?"

Jerry Coker at Ford & Harrison says, "As a general rule, a group of employees cannot be involuntarily subjected to union representation by a labor union."

Coker says that the National Labor Relations Board would have to conduct a vote by the prospective guild members or "an employer (would have to) voluntarily choose to recognize a union as the representative of a group of employees based on authorization cards or a petition signed by a majority of the employees in an appropriate unit."

Sounds like even if the WGA got a contract that covered reality TV, they'd need reality TV writers to consent to being assimilated. Do reality TV writers want that to happen? Some, as pointed out by the NYT, are already represented by the International Alliance of Theatrical Stage Employees. They may doubt whether the WGA will really represent their interests.

But if the reality writers see this strike as an opportunity for leverage on their own demands, they may wish to join. In such a case, perhaps a contract isn't needed to clarify jurisdiction. Louis P. DiLorenzo, co-chair of the Labor & Employment Department at Bond Schoeneck & King, says the WGA "can go to the NLRB and file a unit clarification petition to include the work done by these writers, if not included now. They could also file a grievance and pursue arbitration over whether the current jurisdiction of the contract covers this work. They could organize the nonunion employees as a separate unit, and try to leverage their collective strength against the employer with a provision of honoring each others picket lines."

Imagine what might happen if TV networks didn't have reality television to fall back on.

WGA Strike: Is 'The Office' Blogger a Scab?

Posted by Eriq Gardner

It hasn't been easy for WGA members to figure out which writing activities are okay and not okay during the ongoing strike. Now Rex Sorgatz at Fimuculous wants to know whether the writer(s) who are still blogging as the characters Creed and Dwight Schrute on NBC's "The Office" are breaking union rules by writing for NBC Universal.

Let's assume whoever's penning the blogs is WGA-affiliated (which is a big assumption; we can't imagine why even an aspiring WGA writer would risk the guild's wrath to let the world know that Creed picked up a digital camera in time for Thanksgiving). Even so, the question seems tricky.

On one hand, the WGA's strike rules clearly "prohibit writing services performed for a struck company in connection with new programming intended for initial viewing on non-traditional media." But does that include only multimedia, video, or animation content, as WGA new media committee member Elliot Feldman indicates at Fimuculous?

As a recent THR story illustrates, there may be "more wiggle room than those rules indicate." But the WGA might be concerned that Internet-penned material could find its way onto network airwaves.

Of course, with its team of writer-producers providing some of the most biting criticism of the studios' negotiating position, there's little chance "The Office" will go back into production before the strike ends. But that doesn't solve the query of whether blogging for a TV show's website is permissible. The question of "Internet Interdit" has intrigued some entertainment lawyers, including Jonathan Handel at Troy & Gould, who tells us he had a suspicion the WGA hasn't clearly defined "new media" to anybody's satisfaction. So he called the WGA to find out.

Handel emails us:

WGA Strike: The Art of Negotiating for a Bigger Pot

Posted by Eriq Gardner

Now that contract talks between the WGA and AMPTP will resume November 26, chatter has shifted to how these new negotiations might play out -- and where the studios might be willing to compromise for writers to receive a larger share of ancillary income.

Flip over to the music industry for a second, where demands for a bigger share of royalties are going in the opposite direction. Here, the conglomerates that own the labels are the supposedly beleaguered entities, asking artists for more concessions.

At CMT.com, Chet Flippo outlines the trend. Record labels increasingly want so-called "360 deals" or "multiple rights packages." As revenues from CD sales dwindle, these companies are fighting for survival by asking talent to give up a portion of artist revenue from tours and merchandise in exchange for record labels funding career development, marketing and other services. Flippo writes:

The initial reasoning was that, since the labels supposedly raise, nurture and guide the artists' careers, they are entitled to their "fair" share of the money the artist makes as a result of success achieved in the marketplace. So what had been for many artists their main income suddenly becomes whittled down.

But Flippo has doubts about the value of the labels' services. "Most labels today have stripped their staffs down so lean that there are few, if any, employees left who are skilled at those career development and maintenance skills that are supposedly part and parcel of 360," he writes.

Record label lawyers are increasingly getting acts to sign 360 deals. How? Mostly because they have the bargaining leverage when dealing with new talent. But as new media platforms like MySpace allow musicians to break to larger audiences without corporate backing, record labels will need to offer more in negotiations.

According to a recent Atlantic Records contract obtained by the New York Times, the label gave itself the option to give its artist $200,000 for 30 percent of the net income from all touring, merchandise, endorsements and fan-club fees. But Atlantic was also willing to give the artist 30 percent of the label’s album profits, up from the traditional 15 percent royalty rate. 

WGA Strikers Performing 'SNL' and '30 Rock' Live: Can They Do That?

Posted by Eriq Gardner

Today brought word that the casts of "Saturday Night Live" and "30 Rock" have found an innovative way to raise funds for the WGA strike fund: This weekend, at the Upright Citizens Brigade Theater in New York, both casts will mount stage productions of their shows.

That got us thinking: Can they do that?

The scenario sounds like a law school exam question (something on a Contracts or Copyright or Labor Law final, perhaps), so we checked in with Akin Gump labor partner and our new penpal Howard Fabrick, who says: "If they are doing skits that they previously did on 'SNL,' they are probably misappropriating the rights of 'SNL' or NBC."

According to Playbill, the first show, called "Saturday Night Live," "will feature a collection of favorite sketches." A separate show will feature the cast of "30 Rock" performing an episode of the series. Hmmm.

Fabrick says the striking scribes can create new sketches or stage skits from intellectual property they own, but they can't advertise themselves with trademarks that might violate those associated with the long-running show.

There are also potential contractual issues, he says. Namely, non-compete clauses might prevent Amy Poehler from performing her hilarious "Bronx Beat" character off-the-air. "The only restriction I can think of other than the intellectual property constraints would be something in their employment agreements with SNL which prevented them from appearing elsewhere, particularly portraying characters they established for SNL," Fabrick says.

Who knows whether NBC would try to shut the benefit performances down. But it can't please studio brass to see their own intellectual property used against them to raise money for the strike fund.

MORE: WGA Strike: Is 'The Office' Blogger a Scab?