Can Steve Jobs End the Writers' Strike?

At Macworld, Apple's CEO is expected to announce a movie-download deal with studios that could go a long way toward settling the walkout's main issue

by Ron Grover

As picketing continues outside studio gates, everyone from talent agents to George Clooney has been mentioned or tried their hand at mediating between the Writers Guild of America (WGA) and executives of the TV networks and film production companies. But here's a name that hasn't crossed too many minds: Steve Jobs, Apple's (AAPL) bearded, music-loving chief executive officer.

Consider this scenario: On Jan. 15, as the writers' walkout drags into its eighth week, Jobs will take the stage for a keynote at his annual Macworld conference. He's expected to announce that at least two—and possibly as many as five—studios have signed up to offer their movies for download to Apple's video iPod and Apple TV products. That will no doubt generate big headlines—everything Jobs announces at Macworld does—and could make the notion of downloading movies from the Web a hot topic after years of false starts.

In doing so, Jobs could also put a Hollywood-style klieg light on the major issue separating the writers and movie moguls: how to cut in the unions for a share of the revenue from a new market that the studios have insisted isn't yet big enough to share. "It could validate everything that we've been saying," says WGA Assistant Executive Director Charles Slocum. "If he also announces that it will be in high-definition and you can order from the TV, it will mean the creation of a whole new market."

Prelude at CES

Odds are, at the very least, Jobs will soup up Apple TV, giving consumers the ability to download movies from their sofas. But the Apple announcement, whatever it is, will just be the latest in what's become a steady drumbeat of statements from consumer-electronics companies and Hollywood studios indicating that the download market may finally be gaining some heft.

At the Consumer Electronics Show in Las Vegas last week, Sony (SNE) said it will begin offering movies and TV shows over the Internet through a connection to its Bravia TV set, while TiVo (TIVO) announced it will offer subscribers the ability to download more clips and shows to their TV sets, and Microsoft (MSFT) disclosed that it added ABC and MGM to a list of video providers for its Xbox game player that already includes Warner Bros. (TWX), Fox (NWS), and Disney (DIS).

But no one will generate quite the buzz as Jobs. Keep in mind that his 2005 announcement that Apple would offer Disney TV shows on its iTunes service set off the initial arbitration battle between the studios and Hollywood unions. Back then, the two sides were fighting over the residuals that the studios would put into the union's coffers. The unions believed downloads should be categorized as "temporary" downloads for which they get 1.2% of the studios' wholesale price. The studios insisted it was closer to a DVD sale, for which the writers get a lower amount—about 0.3% of the wholesale price.

The New Media Market Emerges

Ironically, this latest Jobs announcement would come as the studios and writers are fighting over the same issue as they battle over the terms of a new contract. The unions believe they are owed a piece of the action on everything the studios make from selling video for which writers, directors, and actors have contributed. They'd like 2.