The argument that was brought up in my American Television class was that the more you pay out in residuals as well as the portions of the DVD & Download sales is less pie for the studio to take in to cover the studio deductions as well as the money they either profit or reinvest into the studio. After all, the biggest money maker at least in the case of film is the home entertainment market. That being said, a blogger covering the strike for the Hollywood Reporter did the calculations and according to those calculations, what the writers are asking for in compensation isn't a whole hell of a lot, especially when it comes to DVDs and Downloads. In my opinion, I think the biggest sticking point is when it comes to the streaming of episodes and web-exclusives as well as any other digital non-downloadable content that is what the AMPTP is really wanting control of, because the less union interference in that area the bigger cash cow it is for them as well as one less headache they have to deal with every few years.
Funny note: I guess there has been a flame war on the mailing list for my school's RTVF club in which someone thought it would be a good idea to go and picket with the WGAW people and use it as a "great networking opportunity".