What The Strikes In Hollywood Have Cost The Studios:
Since the WGA protest started in early May, Hollywood has been thinking about two things: When may these strikes end? What amount is this going to cost?
The answer to the initial question will rest on what the WGA, SAG-AFTRA, as well as AMPTP can come to an agreement on. As for the cost to the business, it has already been said that the strikes cost California $3 billion.
But now that earnings season is over, studios and streaming services can give us a better idea of the amount the work stoppage has cost them.
Because Of A Strike, Companies Get The Upper Hand:
Or, more precisely, not paying them. In certain instances, the companies get a short-term cash boost because they don’t have to pay for operations that have been stopped. Most of the time, though, that money will be spent in 2024 instead of 2023, so it’s mainly a question of when.
This is what a professor of film industry management at Cal State Northridge, Todd Holmes, thinks based on an economic study of the 2007 Writers Guild of America strike.
37,700 Folks Lost Their Jobs Because Of The Strike:
The Milken Institute, an economic think tank, says that the strike cost 37,700 jobs and $2.1 billion to the California economy.
Holmes pulled that $2.1 billion number and changed it to account for inflation along with other factors. As a result, he found that the strike cost the state of California more than $3 billion.
Strikes Have Helped Cash Flow In The Short Term:
The biggest difference is between people who buy information and people who sell it. For companies that mostly make or hire television and film productions for their own marketing outlets, the strikes have helped their cash flow in the short term because they don’t have to pay for projects that have been stopped.
This bill will be due after the walkouts are over and production starts up again, so Wall Street isn’t too worried about the savings. Suppliers such as Sony as well as Lionsgate are losing money because shows that aren’t being made aren’t paying them.
It’s likely to be even higher now, since more members of the union for actors, Screen Actors Guild-American Federation of Radio and Television Artists, joined picket lines in July.
The 11,500 People Who Belong To The WGA Had Been Upon Protest For 100 Days:
The WGA’s 11,500 employees had been upon strike for a total of 100 days as of Wednesday. The Alliance of Motion Picture as well as Television Producers and the writers couldn’t come to an agreement on May 1 because the writers wanted higher residuals from streaming media, minimum staffing levels, and promises that AI wouldn’t be used to replace them.
The WGA and AMPTP decided to meet last week, but the talks didn’t help break the deadlock. After AMPTP head Carol Lombardini asked the WGA to do so, they told their members on Thursday that they were going to start talking with the studios once more on Friday.
In an email, the union said, “We expected the AMPTP to respond to the WGA’s ideas.” “Our committee is ready to make an equitable agreement at the bargaining table, knowing that the WGA membership as a whole is behind us and that our union allies will continue to back us.”
When The Writers Went On Strike, 160,000 People Joined Them:
On July 13, 160,000 members of SAG joined the writers’ strike against the AMPTP. Like the WGA, the stars want streaming companies to pay them more based on how well their shows do, and they also want artificial intelligence to be used less.
Not every company put a number on how much the strike hurt them. Apple and Amazon, which are both very big tech companies, were able to ignore the problem. At their size, the cost of operations being stopped wouldn’t be important.
But Wall Street experts pushed six companies to put a dollar figure on the problem, which they did.
The Strike Makes It Less Likely That Sales Will Go As Planned:
These numbers showed up in a number of various instances that are explained in this guide, including changes to budgets for spending on content, rises in the amount of free cash flow, as well as drops in expected sales revenues.
Because of the current WGA and SAG-AFTRA strikes, spending has been stalled, cut back, or increased by almost $5 billion. Most of that number came from Disney, Netflix, as well as Warner Bros. Discovery, which doesn’t come as a surprise given how much they spend on content.
Disney Saves $3 Billion By Not Spending As Much On Content:
When it began addressing the elephant within the room, the head of the House of Mouse didn’t waste much time. CEO Bob Iger told analysts that the strikes along with other cost-cutting steps will save Disney $3 billion a year on what is a $30 billion yearly content budget.
Iger said upon the results call that the company expects to spend about $27 billion on content in fiscal 2023, which is less than what they had previously said they would spend.
This is because they are spending less on created content, which is partly because of the writers’ and actors’ strikes. This $3 billion number doesn’t just show how much money was saved because of the strikes.
Iger announced a company-wide reorganization in February, which led to a lot of layoffs and a $5.5 billion cut to budgets for non-sports material. For the calendar year, $3 billion less was spent on material.
How Long Might The Strike Go On For?
Some experts say that this strike could be the longest writers’ strike in the history of Hollywood. A strike in 1988 lasted for 22 weeks, and one in 1960 lasted for 21 weeks. The present strike, which is now in its 15th week, would break both of those marks if it went upon until the middle of October.
“It would be easy to break that,” says Ohanian. “Most of the time, workers have less money to fall back on than companies, so during long strikes, unions tend to give in.
But we haven’t seen that yet, and this could easily go on for six months. Holmes thinks the cost to the economy will be between $4 billion and $5 billion if the strikes last until October.
“With the two strikes, if it went on past October and into November, the estimate would be nearer to $5 billion as well as greater,” Holmes adds.