By Steve Gorman

LOS ANGELES (Reuters) - Hollywood screenwriters went on strike against major film and television studios on Monday, knocking some of America's favorite TV shows out of production in a dispute that hinges on how the Internet is changing the face of show business.

Some 12,000 members of the Writers Guild of America walked off the job starting at 12:01 a.m. EST (0501 GMT) after last-ditch talks with a federal mediator collapsed, setting the stage for the first major Hollywood work stoppage in nearly 20 years.

The talks foundered on the inability of the two sides to come to terms on how writers should be compensated in an era of burgeoning digital technologies, such as broadband Internet and hand-held wireless devices, that are reshaping entertainment.

The greatest initial impact of a strike will be felt on television, as prime-time comedies and late-night talk shows such as NBC's "The Tonight Show with Jay Leno" and CBS' "Late Show with David Letterman," are forced into immediate reruns.

"There will be no 'Tonight Show' tonight," declared one of Leno's head writers, Joe Medeiros, as he walked a picket line outside NBC in Burbank. "None of us wanted a strike. We were driven to this. I'm fighting for the future of every writer."

Leno himself showed up to hand out doughnuts to striking writers on the first day of what some experts predicted would be a prolonged and costly dispute.

"My expectation is that we're in for a long strike, and it will end up in a Pyrrhic victory," said Howard Suber, professor emeritus at University of California Los Angeles and author of the book "Power of Film."

While the late-night talk show circuit relies on a steady supply of topical jokes and sketches, many sitcoms also took a quick hit because they depend on a substantial amount of last-minute script rewrites.

NO LAUGHING MATTER

"We stopped production as of today. All of our writers are here," said former "Seinfeld" star Julia Louis-Dreyfus, whose latest show, CBS sitcom "The New Adventures of Old Christine," was one of the first casualties of the walkout.

She joined striking writers outside Warner Bros. television studio, one of 14 Los Angeles-area sites picketed by the union, including studios owned by Walt Disney Co, Time Warner Inc, Viacom Inc and News Corp.

The first picket lines went up outside NBC headquarters at Rockefeller Plaza in New York City, where "Saturday Night Live" veteran Tina Fey, who currently stars on, writes and produces the NBC sitcom "30 Rock," was on hand.

"This strike affects the show in which I work," she said. "We put our pens down yesterday, and we will not write until negotiations resume."

No further negotiations were scheduled.

Producers of some prime-time series, especially dramas, have worked feverishly for months stockpiling episodes in hopes of riding out a strike until January or even February. Once those shows run dry, networks will be forced to air repeats or "strike-proof" programming not covered by the WGA contract, such as reality shows, news and sports.

The effect on movies will be less obvious since the major studios' screenplay pipeline is well-stocked through 2008.

The last major Hollywood strike, a Writers Guild walkout in 1988, ran for 22 weeks, delayed the start of the fall TV season and cost the industry an estimated $500 million. Los Angeles economist Jack Kyser said a similar strike now could result in losses of at least $1 billion.

Negotiations, which began in July, deadlocked over writers' demands for an increase in "residual" fees they earn when their film and TV work gets reused in DVDs and Internet downloads. They also sought new fees on original material written for the Internet, cell phones and other digital formats.

The union said it ultimately withdrew its demand for higher DVD residuals, an issue that studios last week described as a "complete roadblock to any further progress." But producers have refused to budge on Internet compensation.

Chief studio negotiator Nick Counter said producers see digital distribution of movies and TV as largely experimental or promotional and are reluctant to embrace higher residuals in those areas without being certain how new media will evolve.

"We're not going to do something stupid at the bargaining table," he said. "What we're paying ... is appropriate."

(Additional reporting by Vivianne Rodrigues in New York and Dana Ford in Los Angeles, editing by Mary Milliken and Doina Chiacu)
© Copyright 2007 Reuters.

Photo:
A writer holds a picket line along with other members of the Writers Guild of America at the main gate to Walt Disney studios in Burbank, California November 5, 2007. REUTERS/Fred Prouser