By Steve Gorman

LOS ANGELES (Reuters) - The Hollywood directors' union reached a contract deal with major film and TV studios on Thursday in a move likely to renew momentum for settling a 10-week-old writers strike that has crippled the industry and clouded the year-end Oscar season.

The studios' tentative three-year labor pact with the Directors Guild of America (DGA) includes provisions to pay union members more for work distributed over the Internet -- a key sticking point in stalled contract talks with the writers.

But leaders of the Writers Guild of America (WGA), which has been on strike since November 5, said they needed to analyze terms of the DGA agreement before deciding whether they could serve as template for their own settlement.

The directors' deal came five days after contract talks began, following weeks of informal discussions with the studios -- and months of economic research by the union -- to lay the groundwork for official negotiations.

The studios' bargaining arm, the Alliance of Motion Picture and Television Producers, immediately invited the Writers Guild to engage in a similar round of "informal discussions ... to determine whether there is a reasonable basis for returning to formal bargaining."

The last round of WGA negotiations collapsed on December 7 when the writers' union refused studios' demand to withdraw several of its proposals as a condition for continued bargaining.

WGA West President Patric Verrone said he welcomed the latest olive branch extended by the studios, but added, "They walked away from the table."

"Ultimately, to put this town back to work, we have to make a deal that ends the strike," he told Reuters.

Directors Guild leaders were considerably more upbeat.

"Two words describe this agreement -- groundbreaking and substantial," said Gil Cates, who chairs the DGA's negotiating committee and is the producer of the upcoming Oscar telecast. "The gains in this contract for directors and their teams are extraordinary -- and there are no rollbacks of any kind."

The DGA's existing contract covering 13,000 members, including directors, assistant directors and unit production managers, expires on June 30.

The directors have a history of reaching swift labor pacts with the studios, but the latest deal has drawn unusually intense scrutiny because of its implications for ending a strike by the Writers Guild.

Some 10,500 screenwriters walked off the job on November 5, shattering 20 years of Hollywood labor peace in a dispute that centered on writers' demands for a greater share of revenues from film and TV content on the Internet.

The writers strike has taken an enormous toll on the entertainment industry. Much of U.S. television production has ground to a halt, major film projects have been derailed and Hollywood award ceremonies have been scaled back or canceled.

With the writers threatening to picket next month's Oscar ceremony, and many actors expected to boycott the event if they do, even the film industry's highest honors have been jeopardized.

The Directors Guild deal contains several points addressing how directors should be compensated for work in new media, including provisions that essentially double the rate now paid for Internet downloads of movies and TV shows, the union said.

It also sets new "residual" fees for the reuse of material in the form of advertising-supported online streaming and video clips, and requires studios to work with union directors on content produced specially for the Internet, the union said.

One studio executive familiar with the deal said it was "significantly" more generous than what was offered writers.

But a veteran entertainment lawyer with ties to both sides of the labor talks, Jonathan Handel, said the terms on new media fall short of what the writers were seeking.

(Additional reporting by Sue Zeidler; Editing by John O'Callaghan)
© Copyright 2007 Reuters.

Photo:
Signs are piled up at the end of a rally of striking members of the Writers Guild of America, West in Hollywood, California November 20, 2007. REUTERS/Mario Anzuoni