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On November 5, 2007 the Writers Guild of America, West (WGAW) and the Writers' Guild of America, East (WGAE)—collectively called The Guild—went on strike following failed contract negotiations with the Alliance of Motion Picture and Television Producers (AMPTP). Every three years, the AMPTPT and the Guild renegotiate the contracts of film, television and radio writers in the United States. The strike began days after talks between the two unions failed to meet the expectations of the Guild. The strike was ended on February 12, 2008, fourteen weeks later.
Television companies are the ones who suffer most immediately, as a large number of programs will be without writers. The movie industry may be able to emerge relatively unscathed from a short strike, as studios typically have a much longer cycle for producing and releasing films. Finally, the general Southern California economy will likely suffer, as the entertainment industry accounts for 7% of the Los Angeles County's economy. 
Media companies not involved in television and film may benefit the most from the strike. Traditional print media may be able to steal advertising share away from television, while Internet media companies see a surge in traffic for those seeking news and entertainment. In particular, the strike may only add fuel to the online video industry, which has grown rapidly in recent years.
With 15,000 writers not working and a large number of programs being canceled, the economic effects of the strike are quite significant. While the exact cost of the strike is difficult to calculate, some estimates have put the economic impact at $21.3 million per day. It is clear that Southern California will be most seriously affected, as the entertainment industry accounts for about 7% of Los Angeles County's economy.
Companies involved in the television industry will be negatively affected by the writers' strike. As many television networks were forced to cancel programs whose scripts are yet to be written. These networks are owned by companies whose earnings will be directly affected by these cancellations.
|ABC||Walt Disney Company (DIS)|
|ABC Family||Walt Disney Company (DIS)|
|Cartoon Network||Time Warner (TWX)|
|Comedy Central||Viacom (VIA)|
|CW||CBS (CBS) , Time Warner (TWX) (50% each)|
|Disney Channel||Walt Disney Company (DIS)|
|Fox||News Corporation (NWS)|
|FX||News Corporation (NWS)|
|HBO||Time Warner (TWX)|
|Lifetime||Lifetime Entertainment Services|
|NBC||General Electric Company (GE)/NBC Universal|
|Sci Fi||General Electric Company (GE)/NBC Universal|
|Showtime||Showtime Networks, Inc.|
|TBS||Time Warner (TWX)|
|TBS||Time Warner (TWX)|
|The 101||The DirecTV Group (DTV)|
|The N||Viacom (VIA)|
|TNT||Time Warner (TWX)|
|USA||General Electric Company (GE)/NBC Universal|
Unlike television, movie studios have a much longer cycle for producing and releasing their entertainment. As a result it is assumed that the writers' strike will not have a significant impact on the movie industry in the short term. The strike will however affect how studios advertise for their projects. It is common in the movie industry to use television talk shows as platform for the advertisement of upcoming releases. With programs like "Late Night with Jay Leno" and "The Dave Letterman Show" going into reruns, studios will be forced to find alternative advertisement strategies.
|Columbia Pictures||Sony (SNE)|
|20th Century Fox||News Corporation (NWS)|
|Walt Disney Pictures/Touchstone Pictures||Walt Disney Company (DIS)|
|Warner Bros. Pictures||Time Warner (TWX)|
|Paramount Pictures||Viacom (VIA)|
|Universal Studios||General Electric Company (GE)/NBC Universal|
Companies that provide alternate forms of media and entertainment stand to gain from a prolonged writers' strike. With the cancellation of numerous television programs consumer's will be forced to turn to other forms of entertainment that are not reliant upon the members of the WGA. To that end, advertising forums such as news papers and magazines may see increased advertisement sales as a result of the writers' strike. Companies who rely on television for most of their advertising may branch out to account for the expected lower levels of television viewers.
More obviously, the members of the Guild stand to gain from a successful strike. If they can effectively force the AMPTP to satisfy their requests the benefits in their contracts would be significant.
The Guild outlined numerous proposals for their contracts when negotiations began in 2007. The proposal topics were: Home Video (Videocassettes and DVDs) Residuals, Non-Traditional Media Residuals, Jurisdiction and Reality Television, Jurisdiction and Terms for Made-for New Technology, Jurisdiction and Animation, Jurisdiction and Subcontracting, Jurisdiction and Work Preservation, Enforcement Proposals, Product Integration Rates and Contract Term, Pension & Health, Showrunner Training Program, Made-for-Basic Cable Program Fees, Network Prime Time Minimums for the CW, Quiz and Audience Participation Programs, Daytime Serial Compensation, CW and MYNETWORK TV Residuals, Made-for-Pay-TV Residual, Ringtones, Arbitration, Work-lists, and Union Support.
Of these proposals the main issues causing the Guild to go on strike were DVD residuals, Jurisiction in Reality Television, and "new media".
Under their contracts, writers are entitled to a certain percentage of the sales of DVDs and video cassettes. The amount that they gain from these residuals is determined by a formula that is agreed upon between the Guild and the AMPTP. In 2007 the Guild requested that their DVD residual be doubled. This would result in writers earning approximately $0.08 per DVD sold. In initial talks the AMPTP refused to satisfy this request citing rising production and marketing costs, which are covered by DVD sales.
The issue of jurisdiction in reality television has been inconsistent in past years as the majority of the Guild's writers are focused in script-driven programs and movies. In reality television the main argument of producers is that the programs are, for the most part, unscripted and have no writer. The WGA contends that the creation of scenarios and a subsequent story line constitutes writing and thus should be a part of their contracts.
The Guild has proposed that contract language be added to include reality programming. They have also proposed that titles of "Story Producer" and "Supervising Story Producer" be added to include those writers who contribute to the story line of reality programs.
New Media refers to methods of distribution such as internet downloads, streaming content (e.g., online video, and other on-demand type services. Nothing regarding these forms of media delivery appeared in contracts before negotiations began in 2007. The two main models of this type of distribution are "digital sell-through" and "streaming content". In the first model consumers purchase a copy of the media and download it to their personal computer. Stores such as iTunes and Amazon.com's Unbox are examples of this type of distribution. Streaming media refers to content that can be viewed through the internet in real-time but is not saved to the consumer's computer. Examples include programs available on major network websites such as ABC.com, NBC.com, FOX.com, and CBS.com.
The WGA proposed that writers receive 2.5% of distributor's gross for new media sales and distribution. The AMPTP rejected this proposal. The producers insisted that new media sales (i.e. digital sell-through distributed media) should be compensated under the same formula as DVD residuals. They further denied writer's to any claim to compensation for streaming media, including the streaming of shows through major network websites.