WRITERS STRIKE MAY BE REALITY.

Byline: Jesse Hiestand Staff Writer

Moving Hollywood closer to a devastating strike, the Writers Guild of America broke off contract talks with the studios Thursday over economic issues that have the two sides far apart despite 30 days of negotiations.

Substantial progress was made in the equally vexing area of creative rights, in which the guild's 12,000 members want greater control of and recognition for their work.

But ultimately it was money that led these early talks to be suspended with no plans to resume before the contract expires May 2, possibly bringing the first writers strike in 12 years.

``We want to be paid more money than they're willing to pay,'' WGA President John Wells told reporters at his headquarters in the Fairfax District shortly after the producers union stated its case at the Warner Bros. lot in Burbank.

``We are so far apart on the economic issues that we think there's no way to bridge the gap,'' said J. Nicolas Counter, the top negotiator for the Alliance of Motion Picture and Television Producers.

Both sides said a deal will ultimately be hammered out but observers say it could take a walkout by writers - and the actors guild, who are closely watching as their contract expires June 30 - to force further compromise.

``It looks pretty much like we're going to have a strike now,'' said Hollywood analyst David Davis of the Los Angeles investment banking firm Houlihan Lokey Howard and Zukin. ``I don't think there's ever a winner when there's a strike. It would be best if both sides can come up with a mechanism to even out the economics that have been skewed, mainly the difference between foreign and domestic residuals.''

The two sides do not agree on even the basic numbers behind their latest proposals, which until now were closely guarded through a press blackout.

The producers said they offered to raise writers' compensation by a total of $30 million over three years, what they called an 11 percent gain. Counter said it was unrealistic, given the current state of the industry and economy, for the WGA to ask for $112 million, which he put at a 40 percent increase.

WGA officials say their proposal was closer to $100 million and called that just a 3 percent boost since all the guild's writers would earn a combined $3.6 billion in those years.

They also accused the studios of seeking $34 million in ``rollbacks'' by demanding a 75 percent cut in residuals for the first rerun of shows on network prime-time television and syndication, and the first two reruns on basic cable.

While the writers released what they called a full account of their latest proposal, the producers gave scant details since they believe this is just a ``breathing period,'' according to one of their negotiators, DreamWorks SKG partner Jeffrey Katzenberg.

``We're hoping this is going to be a brief breaking off in negotiations rather than a collapse,'' Katzenberg said.

WGA executive director Jim McLean said negotiations would resume ``when the companies are serious about sitting down and putting an offer on the table that's fair to our members.''

Wells, characterizing the breakdown as a mutually agreed upon impasse, said the guild will hold town meetings with its members beginning next week, with talks likely resuming a week or two before the contract runs out.

By then it might be too late to reach a deal.

``I think the producers pretty much expected a strike - that's why they've been so heavy-handed in producing movies and TV shows ahead of time,'' said industry analyst Art Rockwell of Rockwell Capital Management in Burbank. ``I think the feeling is the Screen Actors Guild will play it even tougher with the producers.''

SAG President William Daniels took part in the WGA press conference in a show of solidarity, adding ``that they've stopped talking certainly gives me pause. I can only hope they will resume as soon as possible.''

Economists estimate that a combined writers/actors strike could cost the Los Angeles County economy up to $1.8 billion a month as production is severely curtailed and it unleashes a ripple effect on companies that support the industry.

``This is a very ominous sign,'' said Jack Kyser, chief economist of the Los Angeles County Economic Development Corporation. ``With this breakdown, it just shows there's a gulf between the studios and writers and the same type of gulf will be there with the actors.''

In what was widely viewed as a sign of their newfound resolve, SAG and its sister union, the American Federation of Television and Radio Artists, set Hollywood's longest strike by commercial actors last year over many of the same issues.

The WGA last struck in 1988, a 22-week walkout that pushed back the start of the television season and hit movie production hard.

Writers say they're taking a tough stance this time because some of the contract imbalances are decades old and that in other cases they accepted reduced residuals, at the studios' request, to help build new markets in home video, DVDs, and reruns on basic cable and foreign TV and the Fox network.

They want residuals for shows on Fox to match those of the three traditional networks, while the producers are holding at 78 percent.

According to the WGA, the studios are refusing to bargain on several fronts. Those include adding 1 cent to the 4 cent residual writers get for each videocassette or DVD sold, increasing residuals for TV shows and movies released to basic cable, and giving the WGA jurisdiction over writing for the Internet. They said the studios only want to grant residuals for new programming shown on the Internet, not existing shows and movies.

The areas where they are closest to agreement are mostly creative issues, such as including background information on a writer in press kits, DVD and Web pages for movies, inviting them to premiers and crew events and letting writers take part in press junkets.

On the issue of whether directors should be able to take the possessory credit ``a film by,'' the writers say they're willing to compromise by letting all directors who have done so continue the practice but limiting the practice to just 10 percent of films by all others.

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Photo:

From left, Disney's Robert Iger, DreamWorks' Jeffrey Katzenberg, producers negotiator Nick Counter and Warner Bros.' Barry Meyer give details about the failed contract talks with the Writers Guild of America.

Tom Mendoza/Staff Photographer