Hollywood Studios, Actors Split on DVD Pay as Contract Expires

By Michael White

June 30 (Bloomberg) -- Hollywood's largest actors union remains split with studios over how performers are compensated for DVDs and products they promote in shows as their contract expires at midnight tonight.

Talks probably will extend beyond today if there are signs of progress, said Steve Diamond, a law professor specializing in labor issues at Santa Clara University in California. The Screen Actors Guild hasn't asked members to authorize a strike and said yesterday that any talk of a walkout would be a ``distraction.''

Failure by the guild and studios to reach a new agreement may mean greater economic damage to an industry still recovering from a three-month writers strike. A work stoppage would likely delay production on films scheduled to start in coming months, including Walt Disney Co.'s ``Prince of Persia: The Sands of Time'' and NBC Universal's ``Nottingham.''

``You don't like to think about another strike in the entertainment industry,'' said Jack Kyser, chief economist for the private Los Angeles County Economic Development Corp. ``It's what you could call a nerve-wracking time.''

The Alliance of Motion Picture and Television Producers, the studios' bargaining entity, will run ads today in the trade publications ``Variety'' and ``Hollywood Reporter'' urging actors to reach an agreement. The guild said in its statement yesterday it is committed to negotiating a fair contract for actors.

Separate Talks

Guild leaders may not make a deal before July 8, when the smaller American Federation of Television and Radio Artists reveals the outcome of a ratification vote on its separately negotiated agreement. Guild leaders are urging a ``No'' vote, a result that might strengthen their own position in negotiations.

The guild is seeking a bigger share of DVD revenue. The Aftra agreement, negotiated in May, provides minimum wage increases and payment for the use of actors' work on the Internet, but no increase for DVD sales.

The guild also wants actors to have the option of refusing to use branded products in films and television shows. Product placement has increased in both media as filmmakers have looked for ways to offset higher production costs.

The guild and Aftra are negotiating separately for the first time in 27 years following allegations from the smaller union that the guild was trying to poach members. The guild, which denied the charge, began talks on April 15. The negotiations broke down on May 6 and didn't resume until May 28, after Aftra reached its agreement.

Overlapping Members

Because Aftra's membership includes about 40,000 SAG members, approval of the smaller union's contract would be a sign that many actors are willing to settle for less to avoid a strike.

The guild, which represents actors in movies and most prime-time television dramas and comedies, has about 120,000 members. Aftra, with about 70,000, has jurisdiction over daytime soap operas, talk shows and a few prime-time shows.

The guild has signed agreements to allow production on more than 300 independent films if there's a strike, said Jonathan Handel, an entertainment attorney with TroyGould in Los Angeles.

A work stoppage would idle films linked to major studios through financing or distribution agreements, a category that covers most major releases. ``Prince of Persia'' is scheduled to begin filming in July and ``Nottingham'' in August, according to the Internet Movie Database, a Web site for film information.

A production shutdown would also add to the estimated $2.1 billion in economic losses caused by the three-month strike by television and movie writers. The writers returned to their jobs in February after agreeing to a contract that included higher pay and compensation for the use of their work on the Internet.

The effects of the writers strike will be felt throughout 2008, the Milken Institute said in a report released June 5.

Guild leaders haven't sought a strike authorization vote and probably won't, Diamond said. Many members who lost work during the writers strike are wary of another walkout, he said.

``I don't think there's high confidence they could get the 75 percent required, and there's low confidence they could get the 90 percent they need to be credible,'' he said.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net.