• by Wayne Friedman , February 11, 2008

Entertainment writers and producers have reached a tentative agreement over the weekend to end a three-and-a-half-month-long strike that crippled original programming on networks and heightened national TV advertisers' concerns over dwindling ratings.

The contract must be approved by the 12,000 Writers Guild of America members. A vote will be held in 10 to 12 days.

Efforts to negotiate a settlement increased after the Directors Guild of America reached an agreement with producers. Reports suggest that the WGA got a better deal than the DGA, receiving a percentage of revenues for video and TV shows that appear on the Internet rather than a flat fee.

In the third year of the Writers Guild deal with producers, writers will be paid a percentage of the distributor's revenue, amounting to a reported 2% of revenues for each show that is streamed.

Writers have been demanding a percentage of Internet video revenues--something that producers have resisted. In return, WGA gave up jurisdiction over animation and reality TV shows.

The WGA also asked for improved residuals from DVD sales and other off-network platforms. Analysts say writers will now get nearly double the rate paid--which will now be paid on a percentage of the distributor's revenue, not a flat fee.

While writers may have seemingly won a major battle, the war may not be over.

TV network executives such as Jeff Zucker, president and CEO of NBC Universal, have expressed a desire to cut the TV pilot process substantially--one where each network typically spends some $150 million for around 25 to 30 pilots per season, the majority of which never go to series. Writers can make anywhere from $75,000 to $125,000 for these pilots.

National TV advertisers have been hurt to some extent this TV season--in part caused by the writers' strike--with many scrambling for hard-to-come-by TV broadcast network rating points that have been in short supply.

Many networks, such as NBC and the CW, have been virtually out of sale since the strike started--all due to declining ratings points as well as makegoods inventory carried over from last season.

Many analysts were pointing to the "Academy Awards" broadcast on ABC on February 24 as the battle line drawn in the sand. As it had done with some other award shows this season, the WGA said it would form strike picket lines at the event.

With that threat, it would have virtually assured that writers and stars could not cross strike lines--thus placing the big TV show and the event itself in jeopardy. That would have hurt most of the entertainment business--not only ABC, but virtually every major studio, from a marketing point of view. These studios also have sister TV network companies.

Analysts say if a deal is not struck by the Oscars event, and if the awards show is cancelled, the producers will resist any attempt to negotiate a settlement with the writers for the remainder of the broadcast season.