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Hollywood 'Striking' Itself Down? Could Be

Wednesday, 3 Oct 2007 | 1:33 PM ET
AP

The Writers Guild of America is asking if its members to authorize a strike. Leaders of the powerful Hollywood guild asked its 13,000 members for strike authorization: saying that the movie studios and networks are basically giving them no choice, are refusing to engage in serious negotiations, and are rejecting all the proposals.

This is certainly a sign that negotiations, starting up again on Thursday will be rocky leading up to the Writers Guild Contracts expiring on October 31. But it doesn't mean that a strike is a sure thing-- this kind of authorization vote is exactly what unions do in the process of negotiations to show that they're serious.

What's the issue? Writers want to continue to collect residuals--payment long after a film or TV show has debuted for every time a piece of content is put on DVD, aired on a foreign TV station, or resold in some way or another. Oh, and they want to collect residuals for digital distribution as well. Studios want to end the residual payment structure--they want employees to only get residual checks after studios have recouped their costs. That sounds reasonable, but with studio accounting, which is opaque, to say the least, the writers want to protect themselves.

So what will happen? Either the writers will strike by the end of this month, or they'll 'strike' a deal. OR they won't renegotiate the contract but they'll continue working without a contract until summer of 2008 when the actors and directors guild contract expires. The idea is if they wait, and all go on strike at once, it would bring Hollywood to a screeching halt. Terrifying stuff for the media companies, and reason for them to want to compromise.

But for now, it looks like no one is backing down.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.