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(Hooray for?) Hollywood on Strike!

In 2007, the Writers Guild of America went on strike over new media. The strike was settled, but then the Screen Actors Guild spiraled out of control, unwilling to accept the same terms the writers had but unable to muster a second strike. In this excerpt adapted from his new book "Hollywood on Strike!," The Hollywood Reporter contributing editor Jonathan Handel analyzes why Hollywood strikes occur.

The history of Hollywood labor has been marked by waves of turmoil followed by periods of quiet. The above-the-line unions were born during the 1930s. Their first strike was in 1952, and there were two more in 1959-60. Then, silence. There were no strikes for two decades. Why? Strike fatigue—the memory of the previous wrenching and costly strikes—is probably one reason, but another is more subtle.

Look at the 1952 and two 1959-60 strikes. All three focused on residuals paid for television broadcasts—a new medium introduced commercially in the late 1940s. It took labor and management a dozen years, through 1960 or so, to adjust residuals structures to the economics of the new medium. No new media were introduced in the 1950s, 1960s, and most of the 1970s. That is probably one reason that labor peace prevailed throughout the 1960s and 1970s.

By the late 1970s, though, new forms of media—cable TV and home video—began to make their presence felt. Also, foreign television sales grew in importance. Thus, once again, management and labor struggled to adjust residuals. At least five strikes ensued in the 1980s. Then—again—silence. Labor peace reigned in the 1990s. Meanwhile, however, there were many changes in technology and business models. One was the elimination of the so-called Fin-Syn rules, which triggered a wave of corporate mergers and the birth of two new broadcast networks: UPN and the WB (now merged as the CW).

As these new networks and Fox (formed in 1986) generated programming and swallowed up local TV stations as affiliates, the off-network syndication market began to collapse, because there were fewer unaffiliated stations. Reruns moved instead to basic cable. Meanwhile, pay TV services started producing original movies and original series. Technology also drove change. Video games became a growing threat to the film and television business. Home video skyrocketed with the introduction of DVD. And the Internet evolved from a government experiment to a consumer necessity.

All of this laid the groundwork for renewed turmoil. The '00s started with a SAG-AFTRA commercials strike in 2000-01, then moved on to tense WGA and SAG negotiations with the studios. Ultimately, those negotiations concluded without strikes. The next round of WGA negotiations, in 2004, was also difficult. Indeed, the writers worked under an expired contract for about five months, and the possibility of a strike seemed real. None materialized, however.

Meanwhile, SAG negotiated a customary deal in 2005 without incident. Both unions had wanted an increase in the home-video residuals formula, but both settled for deals with no increase. That decision stung activist members of both guilds. In late 2005, both unions elected new leadership that promised to take a much harder approach. The flashpoints were bound to be not just home video but also digital media, which was advancing inexorably. With the new leadership in place, and new executive directors installed, it was clear that one or both of the guilds might strike the next time the contracts were up.

For its part, the WGA decided to delay negotiations until mid-2007—just a few months before contract expiration—a form of brinksmanship that stoked industry concern. Fear and mistrust were in the air, and by the time the negotiation process began, the stage was set for a meltdown.

Jonathan Handel is an entertainment attorney at TroyGould in Los Angeles and a contributing editor at The Hollywood Reporter. © 2011 Jonathan Handel.

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