In Tinseltown, a Rush to Settle and Save Face

Its well past the 11th hour in Hollywood, and yet the towns writers and producers are still chipping away at a contract dispute, hoping to avert a strike — and its potentially devastating effects on the L.A. economy.

The Writers Guild, which encompasses television and movie writers, want two things: Money and respect. Theyre demanding more money on the residuals from the shows and films they write, and they also want higher billing on movie screens. Producers initially balked at the demands, but recognizing the power the Guild holds over the industry, they agreed to sit down to talks. The writers contract officially expired Tuesday at midnight — but the talks continue as if that deadline never happened.

Meanwhile, on the not-so-distant horizon, an actors strike also looms, threatening to bring movie and television production to a standstill if union demands are not met by June 30.

TIME Los Angeles correspondent Jess Cagle has been following the writer/actor/producer negotiations since the first rumbles of discontent. He spoke with TIME.com Thursday morning.

TIME.com: Whats the latest on the Writers Guild contract talks?

Jess Cagle: Its hard to say exactly — a news blackout means that even people in the guild dont know whats going on. I do think its safe to say that theres a lot of optimism at the moment (although that could change at any moment, any day) that the contract dispute will be settled.

My hunch is that because the two sides were so far apart when they began these talks, now theyre just trying to save face. Producers are very adamant about not wanting to give the writers any more money on residuals, and writers wanted a lot more on residuals and foreign sales. I bet the Writers Guild is trying to figure out a way to say, okay, we didnt get everything we wanted but we did get this, and heres why thats good. Producers are going to grit their teeth and squeeze out a few more concessions without losing credibility.

My sense is that both sides are arriving at a very, very painful agreement. And if it ends up being too painful, one of them may just say no and back out of the talks altogether.

Have the two sides agreed on an extension? Is that why theyre still talking?

As far as I know, theres been no official extension of the contract deadline. Both sides are still pretending its May 1. They worked into the wee hours on Thursday morning, and will go back to the negotiating table Thursday afternoon.

Is L.A. mayor Richard Riordan still putting on a brave face? Hes got to be nervous about the possible repercussions of a strike.

From the start, Riordan has tried to put an optimistic face on the current labor situation. I think hes really tried to remind the producers and the Writers Guild what the implications of this could be. A writers strike means people lose their jobs and their homes — and if that strike happens, its more likely the actors will strike. The writers and actors essentially want the same thing. At that point, if you have a writers strike in the next few days and then an actors strike at the end of June, thats when the earthquake truly hits the city. Youd see the end of movie production and the end of most television production.

It could be really horrible for the city; a strike could cost Los Angeles $2 billion.

And on top of all that, the actors' unions are making veiled threats that in the case of a strike, actors might not be willing to promote their movies. That, of course, would be bad for media dependent on those interviews, as well as for the producers who count on the success of those movies.

A lot of people might look at a potential actors strike and think only of big-name talent and say oh, please, these people dont need any more money. But in fact, the people whod be hit hardest by a strike are actors lower down the food chain, right?

Absolutely. Look, if you want to throw your sympathy to anyone in this situation, throw it to the actors, without a doubt. Writers are generally pretty well paid, and producers are going to be fine no matter what. But actors face a huge rate of unemployment, and many dont support themselves solely by acting. These folks have also just weathered a six-month strike against advertisers, and theyre still trying to recover from that.