Talks between Hollywood producers and writers broke down on Wednesday night, just hours before the WGA contract expired at midnight, with both sides still far apart on the thorny issue of payment for DVDs and new media.

The Writers Guild of America strike could begin on Friday. The union says it will meet Thursday night to decide whether to walk out or to continue to work and negotiate without a contract.

A WGA strike would create a chill in Canada by shutting down U.S.-made series seen here on CTV, Global and other broadcasters, and by pulling would-be service shoots from Vancouver, Toronto and other centers.

The key problem, on which neither side has budged, is what the WGA calls ‘the hated DVD formula’ — the existing payment plan through which writers receive pennies from the sales of home video. The writers want a bigger slice of DVD sales, plus digital downloads. They are also seeking a share of ad dollars earned from online streaming, and to be paid for original online and other digital content, such as for cell phones.

‘Every issue that matters to writers, including Internet reuse, original writing for new media, DVDs, and jurisdiction, has been ignored. This is completely unacceptable,’ said the guild in a statement issued late Wednesday.

The producers say they need the money from DVDs to cover shooting, and that the online business models are still unproven.

‘The magnitude of that proposal alone is blocking us from making any further progress,’ said Nicholas Counter, president of the Alliance of Motion Picture and Television Producers. ‘We cannot move further as long as that issue remains on the table. In short, the DVD issue is a complete roadblock to any further progress.’