As their contract with screenwriters was about to expire, labor negotiators for film and TV studios trying to avert Hollywood's first major strike in 20 years said they were deadlocked on Wednesday.
It was unclear what would happen next, but union chiefs have said they had all but ruled out declaring a walkout when their contract covering 12,000 screenwriters runs out at 12:01 a.m. Thursday.
Capping an eight-hour round of talks, the studios issued a statement saying writers' demands for an increased share of revenues earned from DVD sales and Internet downloads of their work was "a complete roadblock to any further progress."
"We want to make a deal," said Nick Counter, head of the Alliance of Motion Picture and Television Producers. "But ... no further movement is possible to close the gap between us so long as your DVD proposal remains on the table."
"We call on you to take the necessary steps to break this impasse so that bargaining can continue," Counter said.
He added that he was referring also to the writers' proposals for higher "residual" fees on other forms of "electronic sell-through -- i.e. permanent downloads."
There was no immediate response from the Writers Guild of America (WGA), except to confirm that negotiations had concluded for the night.
No further negotiations were immediately scheduled.
Union leaders won approval two weeks ago from their rank and file to call a strike if they thought it necessary once the existing contract expires.
The writers could continue working under terms of their old contract if both sides decide to keep negotiating.
But studios and TV networks have treated the end of the month as a de facto deadline as they scramble to stockpile scripts and fast-track various productions in anticipation of a work stoppage.
The last major film and television strike was a WGA walkout in 1988 that lasted 22 weeks, delayed the start of the fall TV season and cost the industry an estimated $500 million. The motion picture and TV industry currently generates $30 billion in annual economic activity for Los Angeles County alone.
Wednesday's bargaining session marked the second day of talked joined by a U.S. federal mediator. It began with the union presenting a new set of proposals said to contain a number of unspecified concessions.
WGA leaders have said that in the event a settlement could not be reached Wednesday night, they planned to meet with members on Thursday.
A studio spokesman said after Wednesday's talks that union negotiations told their management counterparts they would contact them on Friday.
Studios have said union demands for higher residuals on DVDs and Internet downloads would stifle growth at a time of rising production costs, tighter profit margins and piracy threats. They insist that digital distribution of movies and TV remains largely experimental or promotional and new-media business models are just developing.
The union accuses the studios of pleading poverty and argues that writers have never gotten a fair deal on the lucrative DVD industry. They also see more of film and TV migrating toward the Internet and wireless platforms and want a bigger piece of that revenue pie.