After a cancelled Golden Globes ceremony, a shut-down in production of America’s most popular TV shows and an estimated $1 billion of losses, the end of Hollywood’s crippling ten-week-old writers’ strike finally appeared to be in sight last night.

Hopes were raised when the Directors Guild of America, headed by the British former Coronation Street director Michael Apted, announced that it had reached a tentative agreement on the terms of its new contract, which will come into effect when the old one expires in June.

If the deal is signed - as seems likely - it will put pressure on the striking Writers Guild of America to end its current work-stoppage and agree to similar terms, saving next month’s Oscars ceremony from cancellation for the first time in its 80-year history.

The WGA’s contract with Hollywood’s studios ran out in November and the strike was called five days later, when talks between the two sides broke down acrimoniously, largely over a failure to agree on royalties for TV episodes and movies shown online. Since then, the WGA has reached temporary ‘strike waiver’ agreements with David Letterman’s production company, Worldwide Pants, and some independent movie studios, including Tom Cruise’s United Artists.

Other than that, there has been a complete stalemate in negotiations, with the WGA’s last talks with the studios breaking down on December 7.

The DGA’s agreement - which was worked out long in advance during private ‘back-channel’ discussions - will also provide a blueprint for the Screen Actors Guild, whose contract with the studios also ends in June.

So far, the writers and the actors have been united, with actors refusing to cross writers’ picket-lines to attend the Globes, hence the cancellation of the ceremony.

The most crucial part of last night’s DGA’s statement was that it had worked out a formula under which its members would be paid for TV episodes and movies ‘streamed’ on the internet.

“Two words describe this agreement - groundbreaking and substantial,” said Gil Cates, chairman of the Directors Guild of America’s negotiating committee. “There are no rollbacks of any kind.”

The studios, represented by the Alliance of Motion Picture and Television Producers, put out their own statement yesterday, saying that “our industry’s creative talent will now participate financially in every emerging area of new media.”

It is thought that the deal increases both wages and so-called ‘residuals’ - payments for repeats - for each year of the contract.

It also gives the DGA jurisdiction over TV shows and movies created specifically for the internet and doubles royalties from iTunes downloads while establishing rates for streamed TV episodes and movies that are supported by embedded advertising.

The WGA will have to get the support of its 12,500 members, many of whom have suffered financially because of the strike, before ending the current industrial action.

Many writers are thought to be eager to get back to work, especially given the looming recession and the ongoing housing crisis, which has hit Los Angeles particularly hard. Members of the WGA range from the unemployed, who survive on residuals cheques, to the multimillionaire creators of America's most successful scripted TV franchises.

The DGA’s tentative agreement with the studios came only five days after formal talks began. It is thought that the directors spent $2 million researching the potential value of new media over the next decade, and held a series of preliminary meetings with key studio heads to establish a basis for the formal talks.

The DGA’s existing contract covers 13,000 members, including directors, assistant directors and unit production managers.

Explore Film

• Film Reviews

• DVD

• Oscars

• Bollywood

Editor's choice

• The top 10 fan versus band scuffles
• Mamma Mia! The first review
• Times critics' 20 best films for kids