The writers' strike is over. After more than three months in picket lines outside the offices and studios of media producers Walt Disney (NYSE: DIS), Viacom's Paramount Pictures, News Corp.'s (NYSE: NWS) Fox, and others, the Writers' Guild leaders gave their blessings to a tentative contract, and the writers will probably go back to work tomorrow.

Frank, we must all compromise
It's not the deal the writers wanted, nor is it the one studio heads dreamed about. But a compromise lets everybody go back to work until they figure out what this newfangled "New Media" distribution channel means. For investors, the most important thing to know about the strike is that it's almost certainly over.

The writers vote tonight to end the strike, and vote again to ratify the contract in a couple of weeks. It's about food on the table for them and big money for the studios. They can make sure that Disney's ABC network will air a real, mostly scripted Academy Awards gala. It's traditionally the second-highest grossing night of TV ads of the year after the Super Bowl. In 2006, the ad revenue from the event was an impressive $80.7 million.

There are 13 reasons I feel this way
That's one good reason why Disney CEO Bob Iger took an active part in the final negotiations last weekend. News Corp. COO Peter Chernin's motivation to sit beside Iger is less obvious, given the company's smaller exposure to the Scripted Show Blues. Maybe he was there to hold Iger back from caving to all the writers' demands.

At the far end of that spectrum, Time Warner's (NYSE: TWX) Warner Brothers and New Line Cinema make far less money on television than they do from their theatrical-release motion pictures -- and the strike could have lasted much longer before having any real effect on cinematic productions.

Some production companies really don't care how the upcoming votes turn out. Marvel Entertainment (NYSE: MVL) and Lions Gate Films are two independent studios that have already signed "side deals" with the Guild to allow their writers back to work. CBS (NYSE: CBS) is an innocent bystander, caught in the collateral benefits blast of David Letterman's Worldwide Pants production house doing a similar deal, giving his and Craig Ferguson's late-night shows a leg up over the usual competition on Viacom's Comedy Central and General Electric's (NYSE: GE) NBC.

Quick, we need an outlet!
In short, Disney needed a deal fast. Other TV-heavy studios, including CBS and cable-happy Viacom, weren't far behind the Mouse in this scrum. News Corp. sees most of its success on the silver screen and small-screen reality shows, so the strike mattered a bit less there. And looking beyond the blindingly obvious stakeholders, the TV-set makers and the electronics retailers that sell them, the strike itself and the terms of its conclusion carried massive implications for the future of the entertainment industry.

Primarily, the bitter battle was fought over online distribution terms, giving newfound credence and weight to the concept of selling media content as digital downloads or streams, and therefore a stronger bargaining position when the next round of contract negotiations comes up.

I believe that the next era in entertainment will see high-bandwidth cable TV operators slinging video on demand at the Internet-based media services. Netflix (Nasdaq: NFLX) is talking now about how the company plans to straddle that fence by playing its movie streams through set-top boxes -- eventually including the cable company's own decoder hardware. The writers deserve a fair cut of those new revenue streams, and the studios need to understand how quickly and irrevocably things are about to change.

Take it away, Fool!
WGA West president Patric Verrone said the deal wasn't "all we hoped for, and it's not all we deserve, but ... this deal assures for us and for future generations a share in the future."

Smart move, Pat. The future will be highly pixilated, and now you have a platform from which to demand a much better deal in three years when the writing on the old studio system's wall should be in white 50-foot letters on the Hollywood Hills. In the meantime, it's up to the studios to understand that resistance is futile

Further Foolishness:

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Fool contributor Anders Bylund owns shares in Marvel, Disney, and Netflix, so he clearly believes that the entertainment business has a future. He holds no other position in any other companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will shave its strike beard now.