Labor Day looms as a crisis point in Hollywood’s predicament

In May, when 11,500 film and television writers went on strike, Hollywood companies like Netflix, NBCUniversal and Disney responded with what amounted to shrugs. The strike wasn’t great, but executives had been anticipating it for months. They can ride it.

The angry reaction from the corporate ranks of Hollywood when the actors came out on Friday was dramatically different. What started as an inconvenience became a crisis.

For a start, the Actors Guild is much more powerful than the Writers Guild, with about 160,000 members, including world celebrities who have studied in the art of delivering messages to captivating audiences. The movie and TV scripts that studios bankrolled in the event of a writers strike were suddenly dormant, bereft of actors to bring them to life. Several big-budget films that were shot were closed immediately, including “Twisters”, “Venom 3”, “Deadpool 3” and “Gladiator 2”.

In interviews, three studio chairs who spoke on condition of anonymity due to the sensitivity of the work situation said Hollywood’s content factories could sit idle for a little more than a month — roughly until Labor Day — until there is a serious impact on the release calendar of 2024. , especially for movies. A work stoppage running through September could force studios to delay big projects for next year by six months, making 2024 look like a ghost town in recent memory unleashed by the Covid-19 pandemic.

The studios were just getting their release schedule looking normal again, with one big movie following another. Another big lull in shows could be devastating for theaters. This year’s box office has already been underwhelming, and with high-profile actors barred from publicity efforts, films due in the second half of 2023 could suffer – especially those with award-winning aspirations. A studio executive predicted Friday that it could jeopardize at least one of its national movie chains.

Bobby Bagby Ford, Creative Director and Executive Vice President, Inc Bed and Breakfast Theatresa mid-tier chain with more than 50 locations in 14 states, said the strikes have “affected the industry at a difficult time.”

“The duration of the ongoing strike will play a significant role in its impact on cinemas,” said Ms Bagby Ford. “If it stays short enough to prevent a massive backlog of films, the situation can be managed.”

Greg Marcus, CEO Marcus Corporation — which owns the nation’s fourth-largest theater chain — agreed the strikes were scary but said they were less of a threat to the industry than the pandemic.

“Depending on the length of time, there could be a gap within a year,” Mr. Marcus said. “But it’s not like it shuts down for months on end, people discuss theater value, and then big gaps because of production delays.”

Labor Day will arrive in a heartbeat, which seems to be prompting the studios to break the ice with the actors sooner rather than later. But there’s a catch: Studio executives were genuinely surprised by the Screen Actors Guild’s reaction to their proposed terms. They felt that they had made great concessions and were stunned by the union’s rhetoric, especially since they had managed to amicably negotiate a profitable deal. new decade in 2020.

Proposed terms included higher wages, protections around the testing process, and more favorable terms for pensions and health contributions. They also offered the dancers to get a price on camera for the days of rehearsal.

In particular, the studios — which have admitted in private conversations that they made a mistake by ignoring writers’ demands for safety barriers around AI — have proposed terms for the use of AI that their negotiators said would protect actors.

But that was not enough to avoid the blow. Chief casting negotiator Duncan Ireland Crabtree said in an interview Saturday that the studio’s proposal was unreasonable. Mr Crabtree-Ireland said the AI ​​terminology compromised “the whole field of acting”, adding that studios also do not offer actors a revenue share in broadcasting.

“These are the basic issues,” said Mr Ireland Crabtree. “And the fact that companies will not move on it reflects a colonial attitude towards the workers who form the entire basis for the existence of their companies.” He said that the representatives want to start haggling again.

The Motion Picture and Television Producers Alliance, which is negotiating on behalf of the studios, disagreed with Mr. Crabtree-Ireland’s characterization of its members’ positions, citing terms of his proposal including “a groundbreaking artificial intelligence proposal that protects the digital likeness of actors”.

The frustration on the other side of the negotiating table was demonstrated by comments Thursday by Disney CEO Robert A. Iger, who said during an interview on CNBC that the workers were “unrealistic.” Pouring gas on the fire was an article on the show business website Deadline that quoted an anonymous studio executive who threatened to “fire” the writers until they “start losing their apartments.” The studio alliance said the anonymous executive did not speak on behalf of its members.

Although some executives see the hiatus as a cost-cutting opportunity, a long-term shutdown has the potential to wreak havoc on an entertainment industry already battered by the rise of streaming and difficulties at the box office.

said Rich Greenfield, an analyst with research firm LightShed Partners.

If Double Strikes only lasted a month or two, Michael said, companies would likely take the shutdown as an opportunity to save money that they would have spent on pre-production—the work done before shooting begins—and bidding on scripts. Nathanson, analyst at SVB MoffettNathanson who focuses on the media and entertainment industries. He noted that some of these costs would be incurred later anyway.

They can also take a second look at the shows and movies they have in the pipeline, Mr. Nathanson said, and trim those that are too expensive. Compare the short strike to a half-time break for a losing team that needs to devise a new strategy.

The strike also threatens the lucrative long-term deals media companies struck during the broadcast boom, when they were willing to pay mind-blowing sums to lure creators like Shonda Rhimes, Ryan Murphy and JJ Abrams. Some long-term deals contain force majeure clauses, which take effect on the 60th or 90th day of the strike, allowing studios to terminate their contracts without paying a penalty. Those clauses could theoretically allow studios to get expensive book deals, Greenfield said, but invoking them would jeopardize relationships with top talent in the future.

If actors don’t return to work by the fall, Nathanson said, it will hurt network television, which needs them for new shows coveted by advertisers. He added that traditional US-based media companies are at a disadvantage compared to Netflix, the dominant broadcaster, which can leverage its own production facilities around the world.

“It’s as if the United Auto Workers have gone on strike, and all of a sudden you see more cars from Japan and Germany on the road,” said Mr. Nathanson.

Publicly, studio executives are urging Hollywood to get back to work. Mr. Egger He said He said last week in an interview from the annual Sun Valley Conference of Business Giants that the strike would have an “extremely detrimental” effect on the entertainment industry.

However, there is little sign of a deal closing.

The negotiating parties all said they wanted a fair deal, blaming the other side for the deadlock. But they all secretly admit that if Hollywood doesn’t thaw in time, everyone will get frostbite.

“Not making anything as a cost-saving strategy is foolish with the fall TV season fast approaching and advertisers and consumers anticipating new programming,” said Elaine Stutzman, chief negotiator for the Writers Guild of America.