LOS ANGELES (Reuters) – Despite continued discord within Hollywood’s biggest labor union, members of the Screen Actors Guild are expected next month to ratify a tentative studio contract narrowly endorsed by its governing board.

Industry experts say approval of the proposed deal would help rejuvenate feature film production that has languished since the old contract covering 120,000 SAG members in film and television expired nine months ago, heightening concerns of a strike.

“We look at this as an important step to get the industry moving,” Dan Glickman, chairman and chief executive of the Motion Picture Association of America, said on Monday about the tentative SAG contract. “This was a bit of a cloud on the industry.”

The recession and global credit crisis have only worsened the production slowdown as studios coping with uncertainty over the labor dispute faced new financial constraints. The economic downturn also was a major factor undermining union support for SAG’s efforts at driving a harder bargain.

“A lot of the rank and file are hurting. They’re out there working in retail, working in hospitality, and those jobs are disappearing,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp.

One key barometer of the film business, on-location movie production in Los Angeles, hit a record low in this year’s first quarter, falling 56 percent from 2008, according to FilmL.A., the agency that issues local street-filming permits.

“Studio feature production is still at a virtual halt,” said Jonathan Handel, an entertainment lawyer who has ties to both Hollywood labor and management and has published a blog following the contract talks.

He suggested that studios were driven to finally close a deal with SAG in part by concern that ramping production back up without a settlement “would have handed SAG leverage in the form of the ability to shut down a production by striking.”

Handel and others predict union hard-liners, led by SAG president Alan Rosenberg, will wage a campaign to defeat the deal reached last Friday with studio executives and approved Sunday by SAG’s sharply divided national board of directors.

Rosenberg has condemned the proposed labor pact as a “terrible” deal and argued that rejection by the rank and file would force the studios to negotiate a better offer.

But when ballots are counted at the end of the three-week voting period, most observers believe union moderates who gained control of the board in elections last fall will have mustered a majority of votes needed to ratify the accord.

The old contract expired June 30 after talks collapsed and the studios presented what they called their “final” offer.

That proposal essentially mirrored the terms of separate contracts the studios reached with several other Hollywood talent unions, including the deal last year that ended a 14-week strike by the Writers Guild of America.

The two sides in the SAG talks were most firmly at odds over how actors should be paid for work on the Internet, seen as the main distribution pipeline for future entertainment.

In the end, SAG was forced to give up several of its chief demands, including rerun fees, also called residuals, for new shows created specifically for the Internet. Rosenberg and his allies say compromises in related areas went too far.

But Sam Freed, head of SAG’s New York division and a member of the negotiating team who supports the deal, said he believed most members were more concerned with a continued stalemate.

“People want to get back to work,” he said. “The lack of a contract has depressed production and directly decreased the opportunities for actors to work.”

(Additional reporting by Alex Dobuzinskis; Editing by Bob Tourtellotte)